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Abstract

This study aims to address the question of cost effectiveness of microgrids versus extending the existing grid in rural regions of the United States through a Monte Carlo Simulation in the statistical tool R. While most literature on the topic is centered on examining the decision-making process in developing nations, this study hopes to address the unique challenges and opportunities within rural electrification in the United States energy transition. This study uses data provided by the National Renewable Laboratory (NREL) and the U.S Energy Information Administration (EIA) to examine the cost- effectiveness of microgrids versus extending the grid in various conditions. After running 7,500 simulation iterations, microgrids demonstrated superior cost-effectiveness with a Net Present Value of $0.52 million compared to $0.31 million for extending existing grid infrastructure, and statistical higher probability of being the superior cost-effective option in 72.3% of 7,500 simulation scenarios. Beyond the critical threshold of 12.4 miles from existing grid infrastructure, microgrids are the optimal rural electrification solution, with a median capacity of 92.7 kW. KEYWORDS: (Monte Carlo Simulation, R, NPV, microgrids, grid infrastructure, rural, united states, cost effectiveness.)

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